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Melia Hotels and Banyan Tree plan to open boutique hotels in Abu Dhabi

Mid-sized hotel brands are joining the list of chains adding rooms in Abu Dhabi.

The Spanish brand Melia Hotels International is looking to enter Abu Dhabi in the next couple of years and would join Banyan Tree Hotels and Resorts, which expects to make it to the capital in a similar time frame.

The Madrid-listed company is already present in Dubai with a 164-room property. The Singapore-based Banyan Tree has two properties in Ras Al Khaimah.

“This part of the world is among the most dynamic markets in the world,” said Gabriel Escarrer, the chief executive of Melia Hotels International.

The Palma de Mallorca-based company would expand in Dubai with a 137-room luxury ME Dubai in the Downtown district next year. It entered Dubai in 2011 with a property in Bur Dubai.

“Small luxury hotels should be in line with the positioning of Abu Dhabi as an exclusive destination for sophisticated travellers,” said Chiheb Ben Mahmoud, the head of hotel advisory at Jones Lang LaSalle, Middle East and Africa region.

“Small niche, boutique hotel operators meet, before anything, the needs and objectives of hotel owners who would like to differentiate themselves and would like to develop, own and asset manage special hospitality concepts.”

While in the medium term these hotels could face challenges as Abu Dhabi establishes itself as a destination, the location could be a good launch pad for a regional expansion, he said.

Melia Hotels is also looking at Qatar and Saudi Arabia for new hotels, including one in Riyadh by 2016. The company reported an operating profit of €201.3 million (Dh1.01 billion) in the first nine months of last year, up 9.3 per cent over the previous year.

The emirate expects to receive 3.1 million guests this year, after a run last year that reported 2.8 million tourists.

Abu Dhabi has 21 hotels in the pipeline, accounting for about 6,480 rooms waiting to come on-stream in the next three years, according to STR Global.

Banyan Tree expects to be in Dubai and Abu Dhabi in the next three years, said Abid Butt, the chief executive of Banyan Tree. During the first half of last year, Banyan Tree’s operating profits were S$46.3 million (Dh134.1m), up 14 per cent.

Melia Hotels and Banyan Tree Hotels and Resorts are equally upbeat about Dubai.

“The country is working well to position the city worldwide for both corporate and leisure [tourists]. As a quality destination it is one of the few in the world,” Mr Escarrer said. “But we need to careful here to be sustainable.”

It has 54 properties in the pipeline in South East Asia, Latin America and North Africa, including three in Morocco. The family business, in which Mr Escarrer’s family controls 67 per cent of the stake, has more than 300 properties in its portfolio, with the majority in Spain, Germany and Cuba.

With an eye on Expo 2020, Mr Butt said Dubai needs to have more sectors such as budget and mid-scale brands to attract travellers of all income levels.

“On the supply side, Expo 2020 might put a little bit of spike, but absorption here is fabulous,” Mr Butt said.

In the middle of the year, his company aims to launch two brands – one aimed at extended stays, from a couple of weeks, and the other an upscale brand. Both want to tap into the emerging middle class in Asia.

Of its 24 properties, Banyan Tree has nine in China, and 15 out of 18 in its pipeline will be in that country by next year.

“China has the largest middle class. It is an emerging destination and an emerging economy, and it might be slowing down. But whether it is growing by 9 per cent or 12 per cent, it is still growth,” said Mr Butt.

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